Friday, February 03, 2006

The Tragedy of the Lottery

PinTA's most recent post prompted me to write my thoughts on the matter of winning the lottery.

Winning a large sum like the lottery offers is something that I used to desire quite a bit. But the more I thought about it, it began to dawn upon me just exactly what a real tragedy winning it would be. This has caused me no shortage of grief, and my desire has faded accordingly. Instead of rating 9 out of 10 like it used to on the desire scale, it's dropped down to a mere 8.9 .

Lest you think I'm off my rocker, I present for you now, the tragedy of the lottery.

Since I live in a State that offers the Powerball, I've seen the jackpots get as high as 300 mil, and I've also witnessed the lottery folk weaseling their way out of paying much more. Oh yes, you see the folks that run this little numbers game like to make out like more than mere bandits. Since I started on this little rabbit trail, I guess I'll go ahead and finish it out. A few years back, when the jackpots got to around 150 mil folks would really start to play, and the jackpots would jump due to all the new fundage being thrown in the mix. Sometimes it'd jump as much as 60 million between drawings, and the higher the amount, the more tickets they sold, and the bigger the jackpot jumped. So in their infinite wisdom, they decided that folks were spending waaaay too much on the lottery, so they limited the increase in jackpots to around 30 mil a pop, to "discourage" people from spending so much. Hogwash. People didn't change their buying habits, the lottery folk just pocketed the rest of the coins! So instead of the winner being the benneficiary, now the lottery folk are. Of course if you win 300 million, who's going to listen to you whine that you didn't get your fair share of the purse?

Ok... where were we, oh yes... tragedy. Lets just, for an easy example, say that you won a Powerball jackpot of 200 million. Now you've got the option of taking half of it in a lump sum, or all of it paid out in a 25 year annuity. Since no one knows what tomorrow will bring, you're foolish not to take the lump sum now. A bird in the hand and all that. So immediately, your 200 million drops to 100. Now the lottery folk withhold 25% of that for taxes, but that's not all the taxes that are due, that's just the downpayment so you don't skip the country without giving them something. The top tax bracket is 39.6% for the Federal Income Tax, and my State's top bracket is 7.8% (since we're the most Republican State in the Union, of course). But hold on a minute... the most Republican State couldn't let such a cash cow go without skimming off a few steaks first, so a few years back they instituted a lottery tax on winnings over 250,000 of an additional 8%. So now your 200 million has dropped from 100 million to the 46.6 million that you actually get to take home. That's still not too shabby for you, but in reality, it's less that 25 cents on the dollar.

Now everyone says that they're going to help their friends and family, buy their mom a car or house or something like that. Here's where the real tragedy occurs. If you pay off the debts of another, that is income to them. For example, if you pay off your mom's mortgage of 100,000, she has to show on her income tax return an income of 100,000, and then she owes the taxes on that amount of income. The only thing is, if she'd have had the 30,000 it takes to pay the taxes, she wouldn't have had a 100,000 mortgage in the first place! And that's the tragedy of the lottery.

Your friends and family can't afford to have you help them out! Everything you do to try and be nice to them ends up kicking them in the back of the head. Now they'll all say, "You can just give me enough to pay the taxes too." Like that's some real advantage. Hell, you've already given over 75% to the greedy bastards to begin with, and now you're going to give them more? Sounds like a foolish investment to me...

So now, when I hear stories of lottery winners losing all of their friends and none of their family talks to them, I know why. If you don't help them out, they hate you because you're greedy. If you do help them out, they hate you because you sicked the taxman on 'em. You can't win. Given those two choices, I'd say keep your money and have them hate you for being greedy. If they're only going to hate you in the end, you might as well still have the money. :P

I did figure a way around this little problem, but I'm not sharing that one. I will make you all this deal though, if any of you wins the big one and wants to know what I'd do in your shoes, I'm sure we can come to some sort of arrangement...

7 Comments:

Anonymous BC said...

Dont tell anyone that you won it. :o)

Or you could give your mom the 100,000 and let her just stuff the sofa with it and slowly use the money to pay off the loan payments monthly as usual. Your mom will still love you.

2/03/2006 3:28 PM  
Blogger mr. schprock said...

Next post, let's discuss the tragedy of good dental hygiene. Surely there's a lot of heartbreak to be found there.

2/05/2006 2:10 PM  
Anonymous bc said...

Im sure he can work something with that. LOL

2/05/2006 2:18 PM  
Blogger trinamick said...

Plus, everyone and their dog comes to ask you for a loan, and all the charities ring your phone for a donation. Tis better to be poor, that's for certain.

2/06/2006 9:04 AM  
Blogger John said...

I'd rather hear about the tragedy of Darth Plagus.

2/06/2006 11:46 AM  
Blogger LL said...

Well KTM, I've got a little story for you...

My bro moved to Boise and was looking for a new roommate. Along the way, he got acquainted with a guy, who happened to have a female roommate. They weren't bf and gf, just living in the same house, sharing the rent. Turns out, the phone was in his name. Well, she was looking for a different place, and so was he, so he and my bro went in and rented a house. He took his phone number with him. Somewhere along the line (about 3 months later), she won the lottery. 63 Million samolians.

Their phone rang off the hook for months with calls trying to get money from her.

A couple years later, the guy got married and my bro inherited the phone number, then I moved in with him for a short time. Believe it or not, we still got calls. Whenever they'd start out with, "Mr. Hiatt, could I have a word..." I'd cut 'em right off, "She's not here, this is just her old number. Why don't you people just leave her alone." In hindsight, I should have promised them all a boat load of cash, and seen what happened when they tried to collect. :ewink:

2/06/2006 7:10 PM  
Blogger NYPinTA said...

I think I would still like giving the winning the lottery a chance. Just to see what it is like... I could always give it back if it becomes to much of a hassle, right?
My best friends in-laws won 30,000 on a scratch off and no one bugged them. I wonder what the cap is?

2/07/2006 2:53 PM  

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